Programmatic ad buying is more efficient than traditional ad buying, but it still has its setbacks, such as lost revenue for publishers and low-quality ad inventory for buyers. In recent years, header bidding has emerged as a potential answer to those problems. This new form of marketing is still an industry mystery to many, with only 21% of marketers having a good grasp of what header bidding is.
US Agency and Marketing Professionals’ Level of Understanding of Header Bidding, Jan 2017 % of respondents
Note: among those whi are involved in digital/mobine advertising; numbers moay not add up to 100% due to rounding Sources: Advertiser Perceptions, “Omnibus Study: January 2017 “ as cited in : “Videology Knowledge Lab: Header Bidding” commisioned by Videology, April 3, 2017www.marketer.com
Header bidding is an advanced type of programmatic ad buying that allows publishers to offer inventory to multiple ad exchanges prior to requesting an ad. This type of bidding contrasts the waterfall method, which can often rob publishers of maximum revenue and advertisers of premium inventory.
Real-time bidding (RTB) is an auction setting where ad space is bought and sold in real time. Once an advertiser’s bid wins the auction, their digital ad is shown instantly on the website or property of the publisher. To maximize revenue during an RTB auction, publishers offer ad space to the highest bidders in a descending fashion.
After direct deals are filled, unfilled inventory gets offered to bidders one ad exchange at a time. If nobody bids over the publisher’s pre-set price floor in the first exchange, inventory is sent to the next network with a lower price floor, and then to the next, until a bidder bids high enough or the publisher calls its ad server, like DoubleClick for Publishers (DFP). The system, which is called a waterfall, works, but it isn’t efficient.
It’s like offering a bag of oranges to four people, one after another and lowering the price whenever someone rejects the offer. Someone eventually might say yes because of the deal, but that definitely isn’t the way to get the best price for your oranges. What’s more, the method gives the impression that you’re selling low-grade oranges that several people have already rejected.
The major problem with the waterfall method is that someone in a lower stage of the waterfall might be willing to pay more than someone higher. Unfortunately, if a bid is accepted higher up, they’ll never get the chance to make an offer.
This is why header bidding is a great solution - everybody bids at the same time, which can dramatically increase a publishers’ yield while at the same time giving all advertisers an equal shot at higher-quality placements.
A user clicks through to a website
The publisher’s header tag requests numerous ad networks
The ad networks place bids
The winning bid is passed onto the publisher’s ad server
Finally, a publisher’s ad server connects the user to an advertiser’s server, which will show the winning ad creative. Advertisers have the ability to win header bids for any inventory, as long as their bids are high enough and do not interrupt direct order delivery.
Header bidding flattens the waterfall and tells publishers exactly what every advertiser is willing to bid before the publisher calls its ad server. With header bidding, publishers are able to maximize revenue and advertisers can gain solid exposure for their brand.
Implementing the header bidding method can be a complicated and counterintuitive process for publishers. The setup is tedious and forces its adopters to develop countless line items for their ad inventory.
Header tag integrations require a heavier upfront lift in terms of trafficking line items and adds a ton of extra work for publishers, who already have so many different areas of your business to focus on.
On top of that, even after setup, header bidding can ruin page load speed. Third-party tags that enable header bidding are like any third-party tag, they bog the page down and make it load more slowly. If visitors abandon your page before it loads, they aren’t going to see any ads and publishers aren’t earning any revenue.
A few new technologies have been created to solve slow page loads. The first is header bidding wrappers, which is a technology used to manage all the header bidding partners a media owner wants to utilize. It organizes buyers and implements rules for the programmatic auction and is used by publishers who work with several header bidding solutions. Header bidding wrappers, also known as a container or framework, ensure that all auctions start at the same time and end in a timely manner. It also makes sure all ads load at the same time, which means the page’s content loads before the ads do.
Some publishers attempt to limit excessive processes by capping the number of bidders per auction, but this defeats the purpose of using header bidding in the first place because more advertisers equals more bids, which equals more revenue.
Server-side header bidding takes all the heavy requests on the browser and moves them to an external server. This process still requires the publishers to embed code on the back-end of their web pages, but all the hard work is transferred from the browser over to the ad server meaning it’s a lot faster.
The browser can focus on displaying your web page to the viewer, while the auction is taking place on a separate server. What’s more, this process takes a lot less work on the publisher’s end to set up.
It’s pretty clear why publishers are choosing to move away from the waterfall method to header bidding.
More options: Working with one SSP means only working with their sources of demand, which are incomplete. Think about it. The more bids you get from advertisers, the more demand you will have
Header bidding also allows you to know what’s being bid ahead of time, instead of having to create a pricing floor and move down the waterfall when it’s not met.
More advertisers and more bids equal more options which are likely to drive bids up and create more revenue for publishers.
For buyers, header bidding offers access to higher-quality placements, even the premium ones that were previously reserved strictly for direct deals.
A major setback of header bidding is its setup. It’s getting easier as the technology matures, but it is a tedious upfront task to get started and requires line items to be built into the header of countless pages.
The biggest issue is page load time, which ultimately comes down to creating a great user experience. Everyone knows that if a page doesn’t load quickly, the user won’t stick around. If the user doesn’t stick around to see the ad load, it doesn’t matter how much money you’re offered for an impression.
For publishers, header bidding can help maximize revenue. For advertisers, it provides access to higher-quality placements, but only at higher costs. If you are paying top dollar for premium ad space, you really cannot afford to waste a single impression. It’s important to remember that the click-through happens at the ad, but the conversion happens on the post-click landing page.